On May 12, the Bureau of Labor Statistics released April's CPI report, and the number wasn't pretty. Inflation came in at 3.8% year-over-year — the highest reading since May 2023 — up from 3.3% in March. A single month earlier, in February, we were sitting at 2.4%. That's a 1.4 percentage point spike in 60 days.
The culprit is the war in the Middle East. Energy costs jumped nearly 18% year-over-year in April, with gasoline up over 28% annually, and the ripple effects of that have travelled across the economy. Experts are saying even if Hormuz opens up today, it will take until the end of the year to see gas prices come all the way back down.
This is the headline. It's real, it matters, and it's going to shape the investing environment for the rest of 2026 and likely beyond. But it’s more nuanced when you look locally at New Hampshire multifamily.
WHAT THIS DOES TO RATES
The Fed's 2% inflation target just got a lot further away. At 3.8%, rate cuts aren't just off the table — traders have raised the odds of a rate hike by year-end to somewhere between 30 and 40 percent. Mortgage rates, which briefly dipped below 6% in February for the first time in years, hit 6.50% this week — the highest level since August of last year.
There's been one headline development that some are reading as a potential relief valve: Kevin Warsh was confirmed this week as the new Federal Reserve chair, and he's been viewed by some housing experts as more dovish on rates — meaning he might favor lowering them to stimulate the economy. The inflation data makes that preference harder to act on, with fellow policymakers signaling a hold with a lean toward hikes if conditions worsen. Don't bank on a new Fed chair saving the rate environment. The data is running the show right now, not personalities.
Real average hourly wages slipped 0.5% for the month and fell 0.3% annually — meaning for the first time in three years, inflation is eating up all wage gains. That's a meaningful squeeze on consumer spending, and it's the kind of dynamic that starts to slow economic activity in a real way.
Which brings up the uncomfortable word nobody wants to say out loud: recession. With inflation re-accelerating, energy prices spiking, consumer sentiment hitting multi-year lows, and the Fed boxed in on rate cuts, the probability of a recession in 2026 is meaningfully higher today than it was six months ago. Economists note that even if a ceasefire holds, prices for gasoline and energy infrastructure damage take time to unwind — "up like a rocket and down like a feather," as one J.P. Morgan analyst put it. The inflationary pressure isn't flipping off with a switch.
If you've been waiting for rates to bail you out of a deal that doesn't work at today's numbers, that thesis is getting harder to hold.
IS A CRASH COMING?
A recession and a real estate crash are not the same thing — and conflating them is one of the more expensive mistakes an investor can make.
The structural conditions that caused 2008 are not here. I’ll repeat that – this isn’t 2008. Delinquency rates are below 4%. Homeowner equity is at all-time highs. Inventory is still constrained. Consumer spending has held up, driven largely by higher-income earners, and the labor market, while softening at the margins, hasn't broken. A slow, difficult market with modestly declining prices is not a collapsing one — it's a normal one after a few abnormal years. The distinction matters enormously when you're making a 10-year hold decision.
IS THERE A SILVER LINING?
Here's the part most people miss when they see a bad CPI print: real estate is one of the few asset classes that structurally benefits from inflation over time. Not in spite of it — because of it.
When you finance a property with long-term fixed-rate debt, you lock in your cost of capital on day one. That debt doesn't reprice with inflation. Every dollar you repay five years from now is worth less in real terms than the dollar you borrowed today. Meanwhile, your rents — your revenue — move with the economy. They don't stay frozen at your acquisition-year underwriting. A property that rents for $1,400 today might realistically rent for $1,550 or $1,600 in 2029 without any value-add work at all, just from inflation-driven rent growth.
This is the mechanical reason long-term real estate outperforms in inflationary environments. Stocks reprice immediately with inflation expectations. Bonds get destroyed. But a well-financed rental property with a 25- or 30-year fixed-rate loan is essentially a bet that the real value of your debt obligation shrinks over time while your income grows. In a 3.8% inflation environment, that bet pays off.
The critical word there is financed. This only works if the debt is long-term, fixed, and the property actually cash flows. If you're in a floating rate structure, or you bought something that only pencils with aggressive rent growth assumptions, inflation working against your carrying costs is a different story entirely.
STAY IN THE GAME
This is the part I keep coming back to when I underwrite anything right now: your ability to hold is your edge.
Real estate has always rewarded patient capital. But in the current environment — where transaction volume is suppressed, rates are elevated, and buyers are sitting on the sidelines — the investors who are going to win are the ones who buy something that works today and can hold it through whatever the next three years looks like. A property that cash flows at 6.5% rates doesn't need the market to bail it out. It just needs time.
The value-add thesis is actually as strong as it's been in years. With fewer buyers active, days on market are climbing, and sellers who need to move are increasingly willing to negotiate. The deals coming to market right now aren't the desperate distressed assets of 2009, but they're real — well-located properties with motivated sellers who bought at peak pricing on short-term assumptions that didn't pan out. If you can get into one at a basis that makes sense at today's rates, with long-term fixed debt and genuine cash flow, you are set up to compound for a long time.